Confidential Settlement Agreements: Which should win – privacy or right-to-know?

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Understanding the term – ‘confidential settlement agreement’ – is the easy part. What’s the ‘sticky wicket’ of this ever-growing form of settlement agreement? - the conflicting interests of the parties’ privacy concerns versus the public’s right to know.

Let’s start by providing you with the somewhat typical, generic language used (in some form or other) of such provisions in a settlement agreement:

Confidentiality: The Releasing Party (Releasor) agrees that neither he nor his attorneys shall reveal to anyone, without prior written consent of the Party Being Released (Releasees), the facts or any of the terms of this Settlement and Release Agreement. Releasor will not disclose the identities of the Releasees, whose conduct was the subject of this lawsuit. It is further understood and agreed to by the parties to this Settlement and Release Agreement that no part of this non-disclosure agreement shall be construed to prohibit counsel from making reasonable and necessary disclosures to carry out the administrative and ministerial tasks incident to this settlement.

Needless to say, these can be quite specific and many times are aimed at prohibitions of disclosure of not only the fact of settlement but also any specificity regarding the identity of the settling party and the amount of the settlement – basically prohibitions against disclosing any identifying information to the public and even more specifically to any form of media outlet. It’s one thing for Client Jones to tell his neighbors that he just settled his lawsuit for thousands or millions of dollars; it’s quite another when a settling doctor or hospital sees their name splashed across the print or online headlines of local media outlets.

The Settling Defendant’s Interests:

This is perhaps the easiest to understand from the viewpoint of the person who agrees to pay settlement monies to the plaintiff who sued them. In the context of medical malpractice cases, no health care provider, especially a physician, wants their good-name/reputation tarnished by news of having settled a malpractice case. Since the reasons for agreeing to a settlement might be avoidance of a verdict in excess of the physician’s malpractice insurance, it could be argued that in such instances it is simply not fair to broadcast the fact that the physician settled because they knew they had done something wrong which hurt one of their patients. Keep in mind, that in settlement agreements there is usually a statement that the settling party – e.g. the physician sued for medical malpractice – denies all allegations of wrongdoing.

That being said, what about those instances – which are not the minority in our case load – in which the conduct of the health care provider does constitute a violation of the standard of care – aka medical malpractice/negligence? Why shouldn’t the public be aware that Dr. Smith did render bad care that caused serious harm? Was this just a ‘bad day’ for Dr. Smith in the operating room or office or a pattern of poor care? Doesn’t the public have a right to know this?

Dr. Smith’s counsel will argue, as trained to do, that there is a defense to every case. In my 35 years of experience, this is often the case. Some defenses are better than others; some are flat out lame. Can’t the public decide on their own? Don’t they have a right to make that judgment? Some would argue they don’t since they don’t possess the expertise to understand the many nuances that go into these settlement decisions. Are they right? It seems you will never get the chance to decide since you will never know about what happened due to confidentiality agreements.

The Plaintiff-Patient’s Interests:

It is unfortunately the case that when a number of our client’s wins a large amount of cash in settlement or verdict, they fear their past and present friends and relatives will then come out of the woodwork. I liken it to professional sports figures whose coterie of friends are at best ‘hangers-on’ for the money and good times.

People who have had to relive tragedies in their lives don’t want the pubic to know for a multitude of reasons. We have represented people whose parents didn’t even know (and to this day don’t know) that they had been in a lawsuit and even gone through a trial! We have always respected the client’s right to privacy. Does that trump the public’s right to be informed?

The Plaintiff Lawyer’s Interest:

What interest could the lawyer possibly have? – you ask. Since this is my bailiwick, permit me to answer the question – marketing. Have you had occasion to visit the websites or print media advertisements of any plaintiff lawyers recently. If you have, I suspect you have seen the crawl or large font posting of verdicts and settlements blasted across the screen/page. If you have a confidentiality provision, this probably should not be the situation. I say probably because some lawyers insist that the right to publicize ‘anonymously’ be crafted into the confidentiality agreement. Many likely do not have this ‘exception’ language but seem to have amnesia when it comes to this provision.

If you look at our website, you won’t see this form of advertising/marketing. Does this mean we haven’t settled a number of cases for large amounts of money for our clients? Hardly. Since the beginning of this year alone, we have settled a number of cases for millions of dollars, with the likelihood of many more to come – God willing! We have elected to respect our client’s right to privacy on the one hand. We have also determined that in some instances there will be no settlement if we put our firm’s interests of marketing ahead of the client’s ability to obtain a settlement, when the defendant is demanding confidentiality.

Do we have news accounts of past verdicts on our website? We do. Those cases went to trial and were deemed newsworthy enough by local media to report on the verdicts regardless of our position on marketing. They were in the public domain; we took the marketing advantage. Hey, we’re just being lawyers. Have these cases gone to appeal or settled post-verdict? You’ll never know.

Have we settled cases for millions of dollars? Well, you’ll never know that either. We do understand our client’s rights to privacy and right to have their interests in obtaining a settlement ahead of our marketing interests.

So what is the answer?:

From the viewpoint of the advocates of the public’s right to know, they can effectively argue in most instances that the client doesn’t have a privacy right once a lawsuit is filed. This is a matter of pubic record. Anyone can go to the courthouse in your county or state (in the case of the District of Columbia – the Superior Court) and ask to see the court files – absent an order sealing a record, which is by far the exception rather than the rule. Even in situations where a case settles under a confidentiality agreement, if one looks at the court docket of any given case, you can trace the history of a lawsuit. When you see a dismissal, do you not understand that absent the case being dismissed in favor of a defendant on motion or by court order for failure to prosecute, the case most likely settled? What happened to the non-disclosure of the fact of settlement or the likely parties to the settlement?

Are there other means to determine if a medical malpractice case has settled? If so, for how much? Well there are and there are not. Were you aware that whenever a doctor settles a lawsuit he/she is reported to the National Practitioners Data Bank? Well, all the information one could ever want is stored there, but the public has no access to this data bank – at least in terms of getting information as to a specific healthcare provider. The following is the express statement on the NPDB’s FAQ page:

The Data Banks are prohibited by law from disclosing information on a specific practitioner, provider, or supplier to the general public. However, persons or organizations may request information in a form that does not identify any particular healthcare organization or practitioner for research purposes.

Well, there goes that potential source of right to know.

What about the local state licensing agencies? Let’s take Maryland, for example. The entity that controls the licensing and disciplining of physicians in the state is known as the Maryland Board of Physicians. It also has a website, which, quite frankly, is much more transparent and informative than many and certainly more informative than the NPDB. By going to the “Search Practitioner Profile” link, you can type in a doctor’s name and find out, among other things, if there has been any disciplinary action against that physician for the past ten years. Maryland should be applauded, in fact, for its access to information on physicians. Could it do more, perhaps. That’s for another day.

In the District of Columbia, did you know you can access similar information? I invite you to undertake this exercise. Don’t be thrown-off when you do your Google, MSN or other search engine inquiry and see the District of Columbia Board of Medicine, but then you find you have been linked to the California Department of Consumer Affairs – for the Physical Therapy Board of California. Must just be a broken link! Transparency may also have a different definition in D.C.

In many of our posts we urge our readers to be informed consumers when it comes to their healthcare. Is one of the ways to become educated about your doctor or the hospital to which you planned to be admitted the ’best’ or ‘right’ healthcare provider for you to do such a search? We think so – at least in part. Being sued or even settling a case does not necessarily mean a physician or hospital is a bad doctor or a bad hospital. It may, however, particularly in the case of the physician, be a place you may care to start your query.

So, what is the public’s right to know in terms of confidential settlement agreements? Does the public’s (i.e. your) right to know trump that of the patient/plaintiff or the healthcare provider/defendant? Should there be a restriction on the use of these agreements – even if that also means a prohibition on the lawyer’s right to publish these settlements on their websites or ads?

I encourage and welcome your thoughts and comments. Please take a moment of your time and share these with our community of readers.